Kuala lumpur: Financial commitments linked to credit cards, Buy Now Pay Later (BNPL) facilities, and personal financing are becoming increasingly common among middle-income borrowers, highlighting the need for stronger financial literacy and responsible borrowing practices, according to financial consultancy Bluebricks Holding Sdn Bhd.

According to BERNAMA News Agency, observations from debt restructuring and financing consultation cases showed that financial strain is no longer concentrated among low-income households but is increasingly affecting the middle 40 percent (M40) income earners segment. Managing director Karl Ng stated that many borrowers earning between RM5,000 and RM20,000 a month are struggling with high debt servicing commitments, leaving them financially vulnerable to unexpected shocks such as medical emergencies, job loss, or vehicle repairs.

Ng explained that the issue is not necessarily an income problem but a leverage problem, where many individuals earn enough to qualify for multiple credit facilities but lack sufficient buffer for unexpected expenses. Despite having enough income to qualify for everything, they do not have enough buffer for any shock, he told Bernama.

According to Bank Negara Malaysia, household debt remained elevated at 84.8 percent of gross domestic product (GDP), or RM1.67 trillion, as of end-2025, underscoring the scale of consumer borrowing in the country. While this is an elevated figure, the central bank considers the household sector to be financially resilient and the risks manageable.

Ng noted that borrowers within the RM5,000-RM10,000 and RM10,000-RM20,000 income brackets recorded among the highest debt service ratios in cases handled by the firm. Based on its on-the-ground experience, the firm receives 30 to 40 debt consolidation enquiries daily, with many borrowers only realizing how quickly interest, minimum repayments, and penalties could accumulate once debts became difficult to manage. Many clients now have less than 10 percent of their salaries remaining after servicing debts, despite remaining current on repayments.

Ng highlighted the emergence of 'pre-default' borrowers beneath stable debt data, indicating that official indicators such as Malaysia's household debt-to-gross domestic product ratio may not fully capture this growing layer. Borrowers are technically still paying but surviving only through minimum repayments and refinancing, he said.

He added that some borrowers are resorting to family borrowings, Employees Provident Fund (EPF) withdrawals, and non-bank financing to remain financially afloat, while prolonged debt burdens are also contributing to stress and strained family relationships. Common financial mistakes observed include prolonged minimum credit card repayments, excessive BNPL usage, and misunderstanding of effective borrowing costs. Ng emphasized how quickly small unsecured debts could snowball, particularly when only minimum repayments are made on credit cards.

The consultancy also noted that BNPL facilities, widely perceived by consumers as merely a payment option, are increasingly influencing banks' lending assessments. Banks are becoming more cautious towards borrowers with multiple BNPL commitments, even when the outstanding amounts are relatively small, as such facilities may indicate stretched cash flow management.

Ng said reducing household debt stress would require stronger regulation, earlier financial intervention, and a shift in borrowing culture among Malaysians. Recent regulatory reforms introduced by the government, including tighter oversight of BNPL operators, are in place, but Ng argued that financial literacy efforts should be expanded further, particularly for first-time borrowers and young working adults.

He proposed mandatory short financial literacy modules for consumers applying for credit cards, personal loans, and BNPL facilities. Ng suggested that a three to five-minute module should be applied for every credit card sign-up and every loan application made to ensure borrowers fully understand effective interest rates, repayment obligations, penalties, and long-term debt risks before taking on financing commitments.

Ng believes that education should come first while regulation acts as the fallback mechanism. When consumers truly understand how debt works, they would naturally make better borrowing decisions. He encouraged Malaysians to build emergency savings and reserve funds early instead of relying excessively on credit facilities during financial shocks and called for greater public discussion on debt-related issues to reduce stigma surrounding financial distress and encourage borrowers to seek help earlier before debts become unmanageable.